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en-usTechdirt. Stories filed under "contracts"https://ii.techdirt.com/s/t/i/td-88x31.gifhttps://www.techdirt.com/Tue, 29 Nov 2016 14:45:57 PSTFollowing Public Records Request, State Legislature Votes To Make Government Contracts SecretTim Cushinghttps://www.techdirt.com/articles/20161122/08312236106/following-public-records-request-state-legislature-votes-to-make-government-contracts-secret.shtml
https://www.techdirt.com/articles/20161122/08312236106/following-public-records-request-state-legislature-votes-to-make-government-contracts-secret.shtml
A public records request is seemingly behind the Mississippi state legislature's speed decision to make even more legislative documents exempt from public records laws.

Mississippi Today asked for copies of the state's already-signed contract with EdBuild. The nonprofit company was handed $250,000 to begin working on an overhaul of the state's "Adequate Education Program" [how inspiring!], which determines school funding. Seems like the sort of thing that would be of interest to the public.

Faced with a public records request from Mississippi Today for the state’s contract with EdBuild, a legislative committee voted Tuesday to adopt a new policy mandating that all contracts it approves be confidential.

The House Management Committee, which approves contracts entered into by the House of Representatives, used a voice vote to pass the policy, which states “All contracts entered into by the House Management Committee shall be confidential and shall not be released to any person or entity, except as specifically directed by the House Management Committee only when the committee deems necessary for the execution of the contract.”

Apparently just knowing its money is being spent should be good enough for the state's residents. All other details are best left in the hands of those deciding how the public's money will be spent. The public is being thrown a belated bone with a comment period that arrives after the contract has already been approved. Comments at the one-hour meeting are limited to three minutes each and commenters will have zero information work with.

This wasn't the vote the committee was supposed to engage in. The session in which the new restriction was passed was originally supposed to be used to discuss whether or not the legislature would release the contract to Mississippi Today. Rather than decide the fate of a single set of documents, the legislature granted themselves a broad exception to public records law.

In Mississippi, that's something the legislature is allowed to do.

Before the policy was passed, the Legislature essentially controlled its own rules about which records are public and which are not. The Mississippi Public Records Law says nothing in the law “shall be construed as denying the Legislature the right to determine the rules of its own proceedings and to regulate public access to its records.”

So much for transparency and accountability. Instead, Mississippi residents are asked to blindly trust their representatives. According to one legislator quoted in the piece, the only thing the state's public records law actually can pry loose from representatives is travel records.

Many legislators seem to prefer an uninformed electorate. This allows them to push their own agendas, rather than those of their constituents. Every few years, an appearance of caring is projected as voters are courted, but as soon as they're back in office, the only input they appear to want is monetary.

Contract information -- especially on awarded contracts -- should not be considered a de facto secret. The public deserves to know how its money is being spent. As it stands in Mississippi, the public is only going to be told its money is being spent. Everything else is just none of their business.

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]]>but-thanks-for-askinghttps://www.techdirt.com/comment_rss.php?sid=20161122/08312236106Wed, 29 Jun 2016 11:54:49 PDTLessons From The Downfall Of A $150M Crowdfunded Experiment In Decentralized GovernanceZach Graveshttps://www.techdirt.com/articles/20160624/13312834815/lessons-downfall-150m-crowdfunded-experiment-decentralized-governance.shtml
https://www.techdirt.com/articles/20160624/13312834815/lessons-downfall-150m-crowdfunded-experiment-decentralized-governance.shtml
Hype around blockchain has risen to an all-time high. A technology once perceived to be the realm of crypto-anarchists and drug dealers has gained increasing popular recognition for its revolutionary potential, drawing billions in venture-capital investment by the world's leading financial institutions and technology companies.

Regulators, rather than treating blockchain platforms (such as Bitcoin or Ethereum) and other "distributed ledgers" merely as tools of illicit dark markets, are beginning to look at frameworks to regulate and incorporate this important technology into traditional commerce.

Beyond potentially making a lot of people poorer – who probably should have known better than to invest in an experimental "robotic corporation" — the theft has created a massive political rift within the blockchain community, and threatens to undermine trust in a technology described as the "trust machine". In addition, this event raises serious questions about the cybersecurity risks of distributed applications, the (lack of) enforcement of existing securities laws and the potential for increased scrutiny by regulators looking to protect unwary investors.

Prior to last week, The DAO was widely considered a phenomenal success. It enjoyed the largest crowdfunding in history, raising the equivalent of more than $150 million, or about a tenth of the value of the Ethereum blockchain platform on which it was built. While you could conceivably build a DAO for anything, since it was a piece of software, The DAO was created for the purpose of developing the Ethereum platform and other decentralized software projects. According to its "manifesto" on daohub.org:

The goal of The DAO is to diligently use the ETH it controls to support projects that will:

• Provide a return on investment or benefit to the DAO and its members.
• Benefit the decentralized ecosystem as a whole.

In short, it was developed as a venture-capital fund and, importantly, its investors expected returns.

@steve_somers Personally I think it will be spent more smartly than if it was just as pure ETH. Now falls under governance of the many.

What is a DAO, anyway? And how does it work? Christoph Jentzsch — founder of the German company Slock.it, which helped create The DAO — explained the concept in his white paper as "organizations in which (1) participants maintain direct real-time control of contributed funds and (2) governance rules are formalized, automated and enforced using software."

As American Banker's Tanaya Macheel writes, DAOs and the smart contracts on which they are built could have a lot to offer traditional financial institutions:

In theory, distributed autonomous organizations (of which the DAO is one of the first examples) are a hardcoded solution to the age-old principal-agent problem. Simply put, backers shouldn't have to worry about a third party mismanaging their funds when that third party is a computer program that no one party controls.

At a time when the financial services industry is trying to automate old processes to cut costs, errors and friction, DAOs represent perhaps the most extreme attempt to take people out of the picture.

DAOs can be deployed on the distributed global computer of the Ethereum platform or other suitable blockchains, including private ones. One mechanism to fund them is through a "crowdsale" of DAO tokens that act like shares of stock, which is what The DAO did. Token-holders can vote on new proposals (weighted by the number of tokens a user controls) to change the structure of the DAO and alter its code. Tokens also can be traded and have an exchange-value. As The DAO's "official website" daohub.org describes it:

The DAO is borne from immutable, unstoppable, and irrefutable computer code, operated entirely by its members.

How exactly does an immutable decentralized computer get "hacked"? According to DAO developer Felix Albert, it wasn't. Unlike the failed bitcoin exchange Mt. Gox — where nearly $500 million of bitcoins were lost due to a combination of breach and fraud — the theft exploited a bug that previously had been undiscovered (or more accurately, hadn't been fixed) in its code.

A quirk of robotic corporations is that they take their bylaws literally. Like Asimov's robots, DAOs are built with rules to govern their behavior that cannot easily be revised or overwritten once they are set in motion. Inevitably, these sometimes conflict with our preconceived ideas of how they ought to operate.

The attack [on The DAO] is a recursive calling vulnerability, where an attacker called the "split" function, and then calls the split function recursively inside of the split, thereby collecting ether many times over in a single transaction.

It wasn't really a hack at all. It was human error. Making matters worse, The DAO's promoters (in this case, Slock.it Chief Operating Officer Stephan Tual) had said this kind of bug wouldn't be an issue just a few days before the theft (whoops).

Lots of potentialvulnerabilitiesfor The DAO had been discussed and it was even suggested to place a moratorium on proposals. Meanwhile, its promoters confidently asserted everything was fine:

We are assuming that the base contract is secure. This assumption is justified due to the community verification and a private security audit.

Additionally, Slock.it's blog claimed that the generic DAO framework code had been audited by a leading security firm:

We're pleased to announce that one of the world's leading security audit companies, Deja Vu Security, has performed a security review of the generic DAO framework smart contracts.

On close inspection, the only report they linked in their blog was three pages long. It's unclear whether a rigorous formal audit had ever been conducted. After the attack, people started asking for the audit report and wondering why Slock.it hadn't shared it. The security firm, Deja Vu, even responded on Reddit.

Hi Everyone, Adam Cecchetti CEO of Deja vu Security here. For legal and professional reasons Deja vu Security does not discuss details of any customer interaction, engagement, or audit without written consent from said customer. Please contact representatives from Slock.it for additional details.

Whoever was in charge of auditing the code screwed up big-time. As former Ethereum release coordinator Vinay Gupta explained on YouTube, The DAO was an experiment that was never built to handle this much risk:

We all knew as we watched this happening that this was an emperor's clothes scenario ... there was no way that that smart contract had undergone an appropriate amount of scrutiny for something that was a container for $160 million.

Sure, everyone involved should have stopped it from getting carried away. But what are the actual consequences when a decentralized extralegal robot corporation doesn't do what it's expected to? Is anyone really "in charge" of making sure it works? Is anyone on the hook if the whole thing goes down the tubes because of its creators' (or proposal authors') lack of due diligence?

For one thing, as Coin Center's Peter Van Valkenburgh explains, DAOs are likely to run afoul of existing securities law – potentially implicating their developers, promoters and investors:

The Securities Act intentionally defines "promoter" broadly: "any person that, alone or together with others, directly or indirectly, takes initiative in founding the business or enterprise of the issuer." Given the breadth of this language, developers should carefully weigh the risks of being visibly associated with the release and sale of [DAO] tokens.

Individuals deemed to be promoters of a [DAO] may be found to be in violation of Section 5(a) and 5(c) of the Securities Act. Under these sections it is unlawful to directly or indirectly offer to sell or buy unregistered securities, or to "carry" for sale or delivery after the sale an unregistered security or a prospectus detailing that security. Even if a [DAO] is deemed to be an unregistered security, it remains very unclear how promoting that [DAO] would or would not equate to these unlawful activities, and who—if anyone—would be found to have violated the law. Nonetheless, broad interpretation of these laws may potentially implicate any participant or visibly affiliated developer or advocate.

So DAO evangelists could soon be in hot water, regardless of any disclaimers they put up.

To the Securities and Exchange Commission's credit, they have thus far been relatively open to innovations like crowdfunding, as well as the potential for blockchain technology. As SEC Chairwoman Mary Jo White recently said in an address at Stanford University:

Blockchain technology has the potential to modernize, simplify, or even potentially replace, current trading and clearing and settlement operations ... We are closely monitoring the proliferation of this technology and already addressing it in certain contexts ... One key regulatory issue is whether blockchain applications require registration under existing Commission regulatory regimes, such as those for transfer agents or clearing agencies. We are actively exploring these issues and their implications.

Beyond financial regulation, the broader legal treatment of DAOs is a murky subject. With applications running on Ethereum, it's not always clear what the point of enforcement is. You can't exactly sue a DAO in court and then seize its assets. And, while The DAO's creators were in the public eye, that doesn't necessarily have to be the case; it could be deployed anonymously.

Maybe the next DAOs should be anonymous. Avoids the blame game and force us to use tools to build trust despite not trusting the creators.

Even if DAOs are created without a formal legal status, governments may impose legal status on them. As business lawyer Stephen Palley writes at CoinDesk:

If you don't formalize a legal structure for a human-created entity, courts will impose one for you. As most lawyers will tell you: a general partnership, unless properly formalized or a deliberately created structure, is a Very Bad Thing ... [T]he members of a general partnership can end up jointly and severally liable on a personal basis for partnership obligations.

Even if the SEC or other government entity decides to crack down on DAOs, it might be easier said than done. Because they operate on pseudonymous distributed computers, those parties may not be easy to track down (notably, we still don't know who Satoshi Nakamoto is). Even if you did, they might not have any control over it or know what it was doing. Its code also may have been radically altered from its original programming/intent.

But as far as The DAO is concerned, are we in for a slew of lawsuits or calls for SEC action by disgruntled investors? Not so fast. Investors in The DAO may yet be able to recover their losses.

Various prominent stakeholders in the Ethereum community, from Ethereum inventor Vitalik Buterin to Slock.it's Christopher Jentzsch, have suggested that the only sensible solution is to create a "fork" of the Ethereum network that could freeze the attacker's stolen funds and shut down The DAO, with the option to create a “hard fork” to fully reverse the theft and return investors' funds. Some have criticized this approach as a “bailout” or “asserting centralized control.” But it's worth noting that it would require a plurality of miners to adopt it voluntarily; whether they will remains to be seen.

Either way, Ethereum's credibility may be adversely affected. On the one hand, people need to trust that smart-contracts do what they are supposed to — particularly where millions of dollars are on the line. On the other hand, the credibility of the platform is also tied to its immutability. If developers and miners collude to reverse transactions they don't like, that sets a bad precedent.

Additionally, if the community decides The DAO's investors need to take a haircut, it could open up a Pandora's box of legal troubles for its developers and promoters (and maybe even miners and investors), potentially stifling advancement of this important technology.

But wait a minute. Why didn't the attacker see the this coming? Surely if he was sufficiently sophisticated to find a "recursive call" bug, he would have known that split funds would be locked away for 27 days — giving the community time to get wise to his activities and find a solution like the fork.

As previously mentioned, The DAO theft also crashed ETH prices. Savvy readers will note that a DAO vulnerability doesn't mean the Ethereum platform itself was compromised (any more than a nasty bug in Photoshop means that everyone with Windows 10 is at risk).

Was it possible this whole event was a ruse to pull off a "big short", as one user suggests on Reddit? As of now, there's no proof of that, but it's an interesting theory.

But was this even a theft at all? As Slock.it's representative said, "code is law!" If the code doesn't do what you think it does — that's your fault. At least, that's the theory behind an anonymous letter uploaded to Pastebin and purportedly authored by The DAO's attacker:

I have carefully examined the code of The DAO and decided to participate after finding the feature where splitting is rewarded with additional ether. I have made use of this feature and have rightfully claimed 3,641,694 ether, and would like to thank the DAO for this reward. It is my understanding that the DAO code contains this feature to promote decentralization and encourage the creation of "child DAOs".

I am disappointed by those who are characterizing the use of this intentional feature as "theft". I am making use of this explicitly coded feature as per the smart contract terms and my law firm has advised me that my action is fully compliant with United States criminal and tort law.

Adding that:

I reserve all rights to take any and all legal action against any accomplices of illegitimate theft, freezing, or seizure of my legitimate ether, and am actively working with my law firm. Those accomplices will be receiving Cease and Desist notices in the mail shortly.

If the fork moves forward to freeze or seize the attacker's digital assets, could that open up the broader Ethereum community and its miners to legal liability? We'll have to wait and see what happens.

Regardless how The DAO "theft" is resolved, regulators shouldn't be in a rush to impose stricter regulations on Ethereum, which is just a platform, or DAOs in general or even The DAO specifically, should it be reincarnated with better security practices.

While The DAO attack raises serious questions about the viability of creating this "DAO 2.0", that doesn't mean we should stop it from happening. Whether or not you believe all the hype about Ethereum being as important as the invention of the internet, it's an exciting technology that's worth giving the opportunity to grow.

Unlike Bitcoin, which has been around for eight years, Ethereum is only a year old. It officially launched in July 2015, but is already the second-largest cryptocurrency by market capitalization. It's vastly more complex than Bitcoin and still in its infancy; it will have inevitable growing pains on the way to maturity.

Just as the internet wasn't built in a day, neither will smart-contract technology come to fruition without a permissive regulatory environment to grow, much like the Clinton administration's Framework for Global Electronic Commerce did for the internet.

Certainly, vetting DAO code (particularly new proposals) is a big problem. More fundamentally, smart-contract security is an emerging area where people are rightly starting to pivot, following the lessons of The DAO attack. As Ethereum developer Peter Borah writes:

In his response to the bug, Slock's COO expressed shock, referring to it as "unthinkable", and pointing to the "thousands of pairs of eyes" that somehow missed this. It's certainly hard to blame anyone for being shaken by the sudden disappearance of tens of millions of dollars. However, this natural reaction hides the simple truth that anyone who has dabbled in programming knows: bugs in programs are far from unthinkable — they are inevitable.

Making code open-source is not enough. We need mechanisms to create smarter (i.e., fault-tolerant) smart contracts. This could mean more rigorous independent testing, strategies to implement better development practices or, at least, more time to develop through trial-and-error in a lower-risk context. Stakeholder interests also must be aligned to make sure appropriate vetting happens, particularly where voting on code alterations is involved and particularly if we want to develop more complex autonomous programs.

The DAO is an instance of people getting carried away with an exciting new technology, while not effectively managing the new cybersecurity risks that come with it. But just because a group of people screwed up The DAO, it doesn't mean all DAOs are DOA.

While there's an overabundance of utopian thinking in this space, blockchain-based experiments in decentralized governance and peer-to-peer commerce could have immensebenefits that offer truly revolutionary potential. Regulators should continue to take a wait-and-see approach and not use this as an invitation to try to shut them down or impose harsh new regulations.

But given that Atlanta is one of Comcast's growing usage cap "trial" markets, many were wondering just how far Comcast was willing to go in terms of competing on price. With the company's announcement this week that it's beginning to deploy gigabit cable service (technically 1 Gbps downstream, 35 Mbps upstream) in Atlanta, Comcast's strategy has become somewhat more clear. According to the company, Comcast will offer its gigabit service for $70 a month if you sign a contract, but $140 a month if you choose to go without.

"That's Comcast's attempt at price competition, given that Atlanta is one of the markets Google Fiber has targeted for deployment. Comcast tells me that while the $70 option will not feature the company's usage caps (which are being "trialed" in the Atlanta market) users on the no-contract, $140 plan will face usage caps. They also have the option of paying $35 per month extra to avoid said caps."

In other words, if you lock yourself down in a three-year contract to avoid usage caps, you'll obviously not be able to sign up for Google Fiber without a major penalty when the service arrives. If a customer chooses to go without a contract to leave their options open -- they'll face either a 300 GB cap and $10 per 50 GB overage fees, or the option of paying a $35 per month fee to avoid the usage caps entirely. So yes, Comcast's "competing," but in only the way Comcast can.

Much like its usage cap plans, Comcast states these early gigabit cable deployments (Nashville, Chicago, Detroit and Miami on deck) are just trials, and the company's pricing could shift depending on whether this latest long-term contract gambit is effective at keeping potential Google Fiber customers from jumping ship.

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]]>almost-but-not-quite-competinghttps://www.techdirt.com/comment_rss.php?sid=20160315/09134833911Wed, 10 Feb 2016 15:45:32 PSTHonda Tried To Get Jalopnik To Dox Commenter, Delete Posts, Meets The Streisand Effect InsteadTimothy Geignerhttps://www.techdirt.com/articles/20160204/12571933524/honda-tried-to-get-jalopnik-to-dox-commenter-delete-posts-meets-streisand-effect-instead.shtml
https://www.techdirt.com/articles/20160204/12571933524/honda-tried-to-get-jalopnik-to-dox-commenter-delete-posts-meets-streisand-effect-instead.shtml
Criticism is part of life, of course, and I tend to believe that people show their true selves most transparently when they show how they deal with criticism. Unfortunately, we've covered entirely too many stories involving people and companies responding to online criticism poorly here at Techdirt. Typically, these unfortunate responses amount to trying to censor the criticism, but it can more dangerously involve the attempted silencing of journalism as well as threats of legal action against those making the critical comments.

Too many times, websites and web services cave to this sort of censorship. But not everyone. Gawker Media, about whom I could fill these pages with criticism, appears to be pushing back on once such attempt levied against its site Jalopnik. Apparently, car-maker Honda took a negative view of some comments made at the site, purportedly by a Honda employee. For some reason, Honda decided that this distinction meant that it could not only silence the comments, but that it should receive help from the site in outing the commenter. The whole thing starts off, as seems so often the case, with some rather mild criticism in the form of a comment.

In December, a commenter calling him or herself HondAnonymous, posted a string of comments on these posts claiming to be a technician at Honda’s research and development facility. People on the Internet make claims like that all the time, but HondAnonymous seemed able to back them up with actual information about the development of the NSX and other cars. The most interesting bits were complaints about the NSX’s Continental tires (“they are garbage”) and how newer Honda engines have an issue “with the studs on the cat either backing out of the head or snapping altogether.”

Interesting, if not earth-shattering. A lot of it sounds like normal car development. The first one is a complaint we’ve seen in various early NSX tests, and the last is probably a recall waiting to happen. But earlier this month, Honda’s lawyers contacted us to say that information posted by HondAnonymous “is confidential information owned by Honda R&D Americas, Inc., and posts by that user of such confidential information breaches a contractual obligation of confidentiality owed to Honda R&D Americas, Inc.”

As Jalopnik notes, it wasn't them that posted the information. Instead, it was a commenter within the open commenting system Gawker Media uses. Regardless, apparently Honda's attorneys requested not only that all comments by the user be taken down immediately, but they also requested that the site turn over all identifying information about the user to them so that they could hunt down the leak. Think about this for just a moment and you'll see the problem: Honda wants Jalopnik's help in figuring out who this commenter is, while also demanding that the content be taken down because it violates a contractual confidentiality agreement. However, Jalopnik isn't obligated in any way to help Honda, regardless of what private contracts may or may not have been violated.

In typical Gawker fashion, Jalopnik gleefully is posting about all this, Streisanding the issue back into the news when it might otherwise have died off quickly.

It’s pretty egregious for a corporation to try to bully a news organization into deep-sixing comments from its own readers. It’s far more egregious to threaten to subpoena us if we don’t dox one of those readers. The good news is we couldn't dox HondAnonymous even if we somehow wanted to. He or she used an anonymous burner account, and we don’t track passwords, logins, or IP addresses for any of our users. HondAnonymous’ posts will stay up.

To Honda, or any other automaker: If you would like us to delete the comments of our readers or expose their identities (which, again, we can’t do anyway) again, please let me know! I am more than happy to drag your intimidation tactics into the public eye for all your customers and prospective buyers to see. Govern yourselves accordingly.

So, in trying to silence and out a critic, Honda instead finds themselves the subject of reports about the attempted silencing of the critic, whose criticism is once more in the public light. Bang up job, lawyers!

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]]>hi-hondahttps://www.techdirt.com/comment_rss.php?sid=20160204/12571933524Mon, 9 Nov 2015 09:25:54 PSTUS Government Successfully Issues Contract For Open Source Code... For $1Mike Masnickhttps://www.techdirt.com/articles/20151107/00051032739/us-government-successfully-issues-contract-open-source-code-1.shtml
https://www.techdirt.com/articles/20151107/00051032739/us-government-successfully-issues-contract-open-source-code-1.shtml
But... there are glimmers of hope. And a neat little technical division of the GSA, known as 18F, which is modeled on startup culture and bringing a much more innovative take on technology to the government (it's the same group that's going around making the rest of the federal government encrypt their websites...), recently ran an experiment which (somewhat unexpectedly to all involved) resulted in the GSA awarding a $1 contract for a bit of open source software. And, yes, that's ONE DOLLAR.

A few weeks back, 18F announced this experiment in "micro-purchase" contracts, with the idea being to see if they could create a quick and simple process to both (1) do small focused contracts and (2) make it easy for smaller tech firms to actually provide their products and services to the government. So 18F posted the details of a specific problem it was trying to solve to Github, and then created a Google form, to serve as a sort of blind reverse auction. Here's how 18F described things:

If you’re interested in bidding, the closing time for the bid is 12 p.m. on Thursday, October 29, 2015. The opening bid starts at $3,499, and the lowest bid at the closing time will have 10 working days to ship the code necessary to satisfy the criteria. If the criteria are met, the vendor gets paid. If the criteria aren't met the vendor shall not receive payment, the next lowest bidder will have the opportunity.

Got it? Makes sense, as a way to try to keep costs down, but not to make it so crazy low that it's not worth someone's time (or where they're not able to deliver). Except... no one expected someone to (a) bid $1 and (b) then deliver working code that not only met the requirements, but exceeded them. But that's what happened:

Then, there was the $1 bid.

When we received the $1 bid, we immediately tried to figure out whether it was intentional, whether it was from a properly registered company, and whether we could award $1. We contacted the bidder and we confirmed that the bid was valid, that the registration on SAM.gov was current, and that the bid would be the winning bid. It was a plot twist that no one here at 18F expected. This unexpected development will no doubt force us to rethink some of our assumptions about the reverse-auction model.

In some respects, this result was the best possible outcome for the experiment. It proved that some of our core assumptions about how it would work were wrong. But the experiment also validated the core concept that open-source micro-purchasing can work, and it’s a thing we should try to do again. A few weeks ago, micro-purchasing for code was just an idea, but now that we’ve done our first experiment, the data demonstrate that the idea has potential and can be improved upon.

Not only did Brendan Sudol meet the requirements of loading the data, the new code had 100 percent test coverage, an A grade from Code Climate, and included some new functionality to boot.

18F notes that the experiment turned up a few other interesting tidbits, including that of the 16 bidders, 8 of them registered to be a government contractor on SAM.gov after the project was announced (showing that, indeed, the process of becoming a government contractor appears to be getting much easier). They also noted that the highest bidder was for $740 with the smallest (obviously) being $1. The most common bid was $50.

Obviously, the $1 bid is both a bit of a gimmick, and something where Sudol recognized that it wouldn't be that much work to provide the code and it apparently seemed like a project worth doing. I doubt that we'll regularly see the government awarding $1 contracts, and the GSA is hardly likely to become the government version of TaskRabbit or Mechanical Turk. But it's still interesting to see the ways in which the terrible inefficiency of government purchasing might go down -- and more recognition over the idea that, if the government just needs a few lines of code, it doesn't need to award a multi-million dollar contract to some stodgy old "services" company.

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]]>why-that's-1/37-of-a-screwhttps://www.techdirt.com/comment_rss.php?sid=20151107/00051032739Tue, 28 Jul 2015 15:41:49 PDTNew York City Decides To Actually Pay Attention To Its Verizon Contracts After Getting Ripped Off On FiOS DealKarl Bodehttps://www.techdirt.com/blog/netneutrality/articles/20150720/06414631703/new-york-city-decides-to-actually-pay-attention-to-verizon-contracts-after-getting-ripped-off-fios-deal.shtml
https://www.techdirt.com/blog/netneutrality/articles/20150720/06414631703/new-york-city-decides-to-actually-pay-attention-to-verizon-contracts-after-getting-ripped-off-fios-deal.shtmlactually pay attention to city money paid to Verizon after city officials discovered Verizon's broadband-related-promises don't always hold up to scrutiny. As recently noted, a city audit found that Verizon's 2008 promise to wire the entire city with FiOS fiber broadband by 2014 has only been half completed, the telco using loopholes in the language to argue that getting fiber relatively close to many apartment buildings was good enough. The audit also found Verizon was withholding FiOS from some buildings unless landlords promised broadband exclusivity, something that the FCC supposedly outlawed in 2007.

Basically, Verizon did what Verizon's been doing for the better part of a generation now: getting special perks, subsidies and tax breaks in exchange for promises it has absolutely no intention of actually keeping. Former city leaders likely knew this; the 2008 deal was hashed out behind closed doors with then Mayor Mike Bloomberg's office with little to no serious public input.

"In a meeting at the end of June, Mayor Bill de Blasio told commissioners and agency heads they must inform the Department of Information Technology and Telecommunications of all major contract negotiations with Verizon and other service providers...The de Blasio administration's new protocol has been described by insiders as an attempt to keep Verizon from continuing with business as usual while failing to make good on its FiOS franchise commitments—or even acknowledging the shortcomings of its FiOS rollout."

Yes, that's right, Verizon has yet to even admit it failed in any way, making the city's attempt to hold Verizon accountable rather difficult. What makes it even more difficult is that Verizon's likely just adhering to an agreement its own lawyers intentionally stuffed with loopholes, ranging from clever language regarding homes "passed" with fiber versus homes "served," to unrealistic provisions allowing Verizon to wiggle or buy its way out of obligations if certain TV and broadband uptake marks weren't reached.

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]]>novel-ideashttps://www.techdirt.com/comment_rss.php?sid=20150720/06414631703Thu, 9 Jul 2015 10:42:00 PDTSony To Court: Of Course We're Allowed To Contractually Screw Over Our ArtistsMike Masnickhttps://www.techdirt.com/articles/20150708/22281331594/sony-to-court-course-were-allowed-to-contractually-screw-over-our-artists.shtml
https://www.techdirt.com/articles/20150708/22281331594/sony-to-court-course-were-allowed-to-contractually-screw-over-our-artists.shtmlpointing out that the hatred directed at Spotify and other music streaming services in some circles is misplaced. Spotify is paying out a ton of money to the copyright holders (approximately 70% of its revenue). The problem is that much of that money is staying with the labels rather than being passed on to the artists. Earlier this year, in fact, we wrote about a detailed report by Ernst & Young, in cooperation with a European music label trade group, that revealed just how lopsided some of these deals end up being:

That's the breakdown of how subscription fees are distributed. The vast majority goes to the labels and only a small portion goes to artists and songwriters directly. Now, some of that label money may make it to artists through other means -- eventual royalty payments should an artist ever recoup, but we all know how rare that is.

And that brings us to an interesting lawsuit that was actually first filed last year from a bunch of artists associated with American Idol, filed by "19," a management company connected to the show. Originally, the lawsuit had been a typical one concerning the question of whether online streaming counts as a license or a sale for the purposes of the contracts (music contracts pay much higher rates to artists for licensing rather than "sales" and there have been a bunch of lawsuits around that). However, once the Sony-Spotify 2010 contract was leaked a couple of months back, the lawsuit was amended to specifically argue that Sony chose to structure its deal with Spotify in a way that purposely kept revenue from artists.

The implied covenant does not
require SME to structure its affairs in whatever way yields the greatest royalties for 19

It further cites an earlier ruling in this very case, in which the judge said that Sony Music is under no obligation to maximize revenue for artists if it benefits Sony:

...as Judge Abrams already has held, SME can “act on its own interests in a way that may
incidentally lessen the other party’s anticipated fruits from the contract.”

Furthermore, Sony points to the details in the contract that it signed with 19, which flat out says that Sony is free to receive revenue in other forms that don't lead to royalties.

19 cannot claim that the parties intended that SME would not receive
consideration on a general or label basis (such as in the form of an advertising credit), rather than
on a basis tied to the use of a particular sound recording, because 19 expressly agreed that it
“shall not be entitled to a share of income received by or credited to [SME] on a general or label
basis."

The filing from Sony also (rightly) mocks the claim that Sony did some "self-dealing" because it has "control" over Spotify and wanted to benefit Spotify. Noting that it holds approximately 6% of the equity in Spotify, it points out how that is a rather small equity position, and not one that gives it any real control.

Sony Music is absolutely right here. 19 signed a contract that handed over control to Sony Music, and Sony Music appears to be living up to that contract exactly. That the contract itself has a bunch of ways in which Sony can screw over the artists isn't Sony breaking the contract. It's the artists and 19 agreeing to a bad contract that they no longer like -- something that all too frequently happens in the recording industry. Sony's actions in its dealings with the artists and with Spotify may be morally questionable on the issue of whether it's really helping artists, but from a legal and contractual standpoint, it's difficult to see how 19's argument has much of a chance in court. It seems likely to get tossed out pretty quickly.

But, the big point remains: in the end it's not the music services that are to blame for small royalty checks to artists. It's the bad deals that artists themselves continue to sign with labels.

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]]>that's-how-this-workshttps://www.techdirt.com/comment_rss.php?sid=20150708/22281331594Wed, 1 Jul 2015 09:32:02 PDTDonald Trump's Lawsuit Against Univision Is Absolutely HilariousMike Masnickhttps://www.techdirt.com/articles/20150701/00412831512/donald-trumps-lawsuit-against-univision-is-absolutely-hilarious.shtml
https://www.techdirt.com/articles/20150701/00412831512/donald-trumps-lawsuit-against-univision-is-absolutely-hilarious.shtml"running" for President, though as many have recognized, the move appears to be a hell of a lot more about getting himself publicity (thankfully, at least some news organizations are properly categorizing stories about Trump as entertainment rather than politics). Of course, the plan to get more attention may be backfiring somewhat, as some of the ridiculous comments he's made "on the campaign" are coming back to bite him -- including Univision cutting ties with him over the Miss USA telecast and NBC dumping both the pageants and his Apprentice series (that thing is still on?).

In response, Trump has filed what has to be one of the funniest lawsuits we've seen in a long time against Univision over the cancelled deal. It honestly reads like one of those nutty conspiracy theory lawsuits we see all the time, often filed pro se. You'd think that Trump would have trouble finding lawyers willing to file nuttiness on his behalf, but apparently there's always someone. It even resorts to the worst trolling tactic of internet commenters: complaining that his "First Amendment rights" are being violated because Univision dropped him. And it all involves a conspiracy involving Hillary Clinton. Seriously.

While Univision has claimed in the media that its decision to cut ties with MUO came in response to certain comments by Mr. Trump during a June 16, 2015 campaign speech announcing his candidacy for President of the United States, the decision was, in reality, a thinly
veiled attempt by Univision, a privately held company principally owned by longtime Clinton
Foundation donor and current Hillary Clinton fundraiser, Haim Saban, to suppress Mr. Trump's
freedom of speech under the First Amendment as he begins to campaign for the nation's
presidency and, in recent weeks, has dramatically risen in the polls while expressing critical
views of Mrs. Clinton. Little else can explain Univision's decision to not only abandon its
contractual relationship with MUO, but also, upon information and belief, pressure NBC to
follow suit and cut longstanding ties with Plaintiffs nearly two weeks after the statements were
made.

First of all, as all of you (minus a few trolls) are currently screaming right now, no the First Amendment has absolutely nothing to do with this. We'll let the obligatory xkcd explain:

The statement is also entirely superfluous to the lawsuit as well, as none of the actual legal claims have anything to do with his First Amendment rights. Apparently Trump could get the lawyers to throw that bit into the description of the case, but when it came time to make actual claims, even the lawyers wouldn't go so far as to make a First Amendment claim.

Also, "little else can explain?" Really? Actually, there are tons of other explanations, with many of them being a hell of a lot more plausible than any fear of Trump being a legitimate contender for the White House -- for example, the actually stated reason that Trump out and out offended the entire country of Mexico with some ridiculous statements.

Next up in the internet troll playbook, we have the ridiculous claim of "defamation" over statements that the person doesn't like, but which are clearly statements of opinion, rather than fact:

In a move which can only be described as both tasteless and defamatory, on June
25, 2015, Mr. Ciurana, Univision's President of Programing and Content, then posted a photo on
his official Univision Instagram account comparing Mr. Trump to Dylann Roof, the 21 year old
who was recently arrested in the murder of nine (9) African-Americans attending bible study at a
church in Charleston, South Carolina, one of the worst hate crimes to ever take place on U.S.
soil. While Mr. Cuirana would later remove the defamatory post, the damage was already done:
almost immediately, Mr. Ciurana's post was picked up by the media and became the subject of
hundreds, if not thousands, of press articles, yet another example of Univision's dubious efforts
to create a false narrative in an attempt to upset Mr. Trump's longstanding personal and business
relationship with the Hispanic community.

If you're curious, here's the Instagram that Alberto Ciurana put up:

It's pretty clearly a somewhat weak attempt at humor, mocking the hair cuts of Trump and Roof. Tasteless? Perhaps, but there's no law requiring anyone to be tasteful in their internet jokes. Defamatory? Not in any way, shape or form. Not even close. And yet, unlike the non sequitur (and incorrect) First Amendment claims earlier, the lawsuit actually does claim defamation.

It's entirely possible that there are legitimate issues concerning breach of contract here, but even most of that seems like a stretch. Because Univision didn't just cut ties with Trump, it actually agreed to pay the full licensing amounts it promised for the next five years (totaling $13.5 million). In other words, Trump actually didn't lose any direct money from this, because Univision paid up (and, in theory, he could try to license it to someone else, though I'm not sure who would want to pay at this point). But Trump is -- hilariously -- claiming damages of $500 million because now people won't see the pageants.

Of course, Trump's own arguments undermine his arguments (because of course they do). The lawsuit repeatedly brags that there was a bidding war earlier this year, in which Univision emerged victorious. Thus, at least a few months ago, other TV media properties wished to broadcast the pageants. If it was true that this was all just a grand conspiracy by Hillary Clinton supporter Saban, then you'd think that Trump could simply move on to whoever else was in that bidding war (while keeping all the money that Univision paid him anyway!). But, of course, if the real reason for the cancellation was because of Trump's comments about Mexico and the concern about how Spanish-speaking audiences felt about that -- well, then Trump wouldn't be able to find that alternative.

The lawsuit is then equally hilarious in arguing that it can't possibly be Trump's offensive comments about Mexico because Trump has said the same offensive crap many times before. That seems like an odd thing to argue in such a lawsuit, but it's what Trump's lawyers have chosen to claim:

In reality, however, Mr. Trump's calls for immigration reform, particularly with
respect to the U.S.-Mexican border, were nothing new. Indeed, for over a decade, Mr. Trump
had, in numerous television and news interviews, consistently voiced his concerns regarding the
influx of illegal immigrants pouring into the United States across the Mexican border and the
crime that has resulted therefrom, views which were widely reported by every major media
outlet, including, both Univision and NBC.

As Mr. Trump explained in an interview with Fox News' Bill O'Reilly on March
30, 2011, "[t]hey're coming over, and they're climbing over a fence, and there's nobody within
10 miles -- and they're selling drugs all over the place, they're killing people all over the place --
and we're not doing anything about it."

Indeed. It may be true that Trump has said offensive things in the past, but that doesn't mean that Univision can't later decide that the greater attention paid to his more recent offensive comments are such that it no longer wishes to do business with him. There's no rule anywhere that says, "Well, if you didn't complain four years ago when I said some stupid shit, you can't complaint now!" Even if it's true that Univision is only making this decision because Trump's comments went a bit viral, that's Univision's decision to make, and his previous comments are completely meaningless.

Frankly, this lawsuit is absolutely hilarious. The chances of it going anywhere are pretty slim. The First Amendment arguments are ridiculous, but meaningless, as there's no actual legal claim there. The defamation claims are going to get laughed out of court. The whole thing is fairly hilarious, and fits in with the designation of Trump as "entertainment" rather than anything even remotely serious.

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]]>yes we'll add the obligatory xkcdhttps://www.techdirt.com/comment_rss.php?sid=20150701/00412831512Tue, 28 Apr 2015 06:16:49 PDTESPN Sues Verizon For Trying To Give Consumers What They WantKarl Bodehttps://www.techdirt.com/articles/20150427/11334530812/espn-sues-verizon-trying-to-give-consumers-what-they-want.shtml
https://www.techdirt.com/articles/20150427/11334530812/espn-sues-verizon-trying-to-give-consumers-what-they-want.shtmlwe noted last week, Verizon is responding to more flexible Internet TV bundles by offering a few new options of their own. Verizon's new FiOS Custom TV broadband bundles include a core lineup of channels with the option of adding on an assortment of $10 channel add on packs. Once you get done adding the usual DVR rental costs, contracts and fees, the effort is much less revolutionary than it's being portrayed in the media. Still, Verizon's move is notable in that it's busting the biggest contributor to soaring cable costs (sports) and busting it out of the core channel lineup. No longer forcing people who don't watch sports to pay for it? Outrageous.

Comcast/NBC, Fox and Disney/ESPN have been throwing a hissy fit in the week since the new options were announced, claiming that the new offerings violate existing contracts. It's not too surprising; breaking a channel like ESPN out of the core channel bundle immediately reduces ad impressions and overall marketing footprint, even if it's unfair for consumers to pay for incredibly-expensive content they have absolutely no interest in.

ESPN has now filed suit, issuing a summons (pdf) to Verizon (the actual complaint is still being redacted and hasn't been made public yet), stating that Verizon is in breach of contract. ESPN is requesting an immediate injunction and a financial penalty of $500,000. In a statement, ESPN argues that the channel really loves "innovation," except when it doesn't:

"A statement from the network explains that “ESPN is at the forefront of embracing innovative ways to deliver high-quality content and value to consumers on multiple platforms, but that must be done in compliance with our agreements. We simply ask that Verizon abide by the terms of our contracts."

Would that be the same contract that ESPN believes prevents innovative ways of delivering high-quality content? As 2015 becomes the year that Internet video finally starts to see some interesting but imperfect new options, ESPN's swimming upstream if it hopes to sue its way toward keeping cable permanently stuck in 2003. Consumers are increasingly making it clear that soaring programming rates simple aren't tenable, and they intend to cut the cord or flee to piracy if the cable industry wants to continue stumbling drunkenly down the current path.

If ESPN wants to get out ahead of it all, the company might want to focus on actually being at the forefront of developing "innovative ways to deliver high-quality content and value to consumers," in lieu of suing the limited number of cable companies actually trying to do this. Instead, like so many legacy giants, it will sue to try to stop the disruption, push even larger rate hikes on all of the remaining sports customers in the belief that the current cable TV cash cow will live forever, then act disoriented and stupid in a few years when the company finds itself behind the sports programming innovation eight ball.

Don't mess with the Prince of IP unless you're an intellectual property lawyer or have several on retainer. This is what Prince has taught us. Now, he's teaching us to do as he says, not as he does.

Prince handed out someone else's music for free, which would normally be considered copyright infringement. But the lawsuit against him, brought by the manager of the artist whose music was given away, doesn't make that assertion. Instead, it alleges intentional interference with a pre-existing contract -- namely the one signed by the plaintiff (talent scout Jolene Cherry) and Prince's partner in free album giveaways, Judith Hill.

According to the complaint filed in L.A. Superior Court on Friday, Hill signed an exclusive recording agreement with a joint venture between Sony and The Cherry Party after appearing on The Voice in 2013. Cherry, a talent scout who takes credit for discovering Lady Gaga, says her relationship with Sony was later restructured and that The Cherry Party became a successor-in-interest to rights under the recording agreement.

Hill signed a contract with Cherry, then asked if she could make an album with Prince. Cherry rejected the request and followed up with a warning to Hill that working with Prince would violate their contract -- a warning Hill ignored. Prince and Hill collaborated on an album and proceeded to give it all away.

Included in this gratis album are songs allegedly written by Hill's co-writers and previously recorded for The Cherry Group. The lawsuit claims Prince's actions have basically made Hill's Cherry Group/Sony Records debut album all but unreleasable. Despite Hill's willing participation in both the recording and the free giveaway, she is not named as a co-defendant.

In very closely related news, Hill is currently suing Cherry for allegedly botching a contract with Sony Records, as well as for harming the singer's reputation by altering a previously-recorded track to make it sound like a love song to North Korean dictator Kim Jong-Un. (That last half of the previous sentence is most assuredly not made up.)

Underneath everything else, there's the simple fact that Prince's IP-protectionism is apparently applied on a case-by-case basis. If it's even tangentially related to him, it's off limits. If it's someone else's (Hill's co-writers, Cherry Party), it can be given away freely. If nothing else, this situation will hopefully result in "purple with hypocrisy" joining "green with envy" in the annals of American idioms.

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]]>BUT...-will-he-learn-anything-from-this-experience?https://www.techdirt.com/comment_rss.php?sid=20150330/10544530487Thu, 5 Feb 2015 08:02:15 PSTYes, Major Record Labels Are Keeping Nearly All The Money They Get From Spotify, Rather Than Giving It To ArtistsMike Masnickhttps://www.techdirt.com/articles/20150204/07310329906/yes-major-record-labels-are-keeping-nearly-all-money-they-get-spotify-rather-than-giving-it-to-artists.shtml
https://www.techdirt.com/articles/20150204/07310329906/yes-major-record-labels-are-keeping-nearly-all-money-they-get-spotify-rather-than-giving-it-to-artists.shtmltoo low, even though almost none of these services are anywhere close to profitable, and most are handing out the vast majority of their revenue to copyright holders. The complaints are often nonsensical. Way back in 2012, we noted that the target of these musicians' anger appeared to be misplaced, as the CEO of Merlin (which represents a ton of indie labels) admitted that the real problem was that Spotify paid lots of money to labels and it was the labels not giving that money to the artists. Yet, rather than blaming their own labels (or their own contracts), these artists lashed out at Spotify and other streaming services. Just a few months ago, we covered this issue again, with even Bono admitting that the real problem was the lack of transparency from the labels.

And, it appears, there's a decent reason why those labels haven't been eager to be transparent: because they're keeping most of the money. The Music Business Worldwide site has the details on a new report put together by Ernst & Young with the French record label trade group SNEP, concerning where the money from streaming services Deezer and Spotify ends up. Spoiler alert: it's not with the artists. Here's the overall share of the 9.99 Euros that people pay for a premium account on these services:

As you can see, the labels get the lion's share, with songwriters/publishers splitting 10% and the performers getting less than 7%. And, if you look at the specifics of the actual post-tax payout, you can see the contrast more starkly:

The labels end up with nearly 75% of the total payout, with actual artists and songwriters left with the scraps.

Of course, since this project was paid for by SNEP, which represents the major labels, it then tries to spin this as being not only perfectly fair, but a good thing for the artists themselves. What, you say? How can that be? The report claims that 95% of that money that goes to the labels goes to cover all of the "expenses" those poor poor labels have to endure to record and... um... upload(?) the actual music. Sure, in the past, it may have been reasonable for the labels to take on large fees for distribution -- but that's when it meant manufacturing tons of plastic and vinyl and then shipping it to thousands of record stores around the globe. In this case, there's no manufacturing, and distribution is an "upload" button. Sure, there are some marketing costs, but the numbers ring pretty hollow (especially for many of the artists for whom the labels do little to no marketing).

So, again, rather than blaming these streaming services, it appears that perhaps they should be discussing things with the labels.

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]]>who-are-you-blaming-now?https://www.techdirt.com/comment_rss.php?sid=20150204/07310329906Mon, 26 Jan 2015 13:10:00 PSTYouTube's Offer To Musicians Isn't As Bad As Some Believe, But YouTube Should Still Change Its PoliciesMike Masnickhttps://www.techdirt.com/articles/20150126/05182729815/youtubes-offer-to-musicians-isnt-as-bad-as-some-believe-youtube-should-still-change-its-policies.shtml
https://www.techdirt.com/articles/20150126/05182729815/youtubes-offer-to-musicians-isnt-as-bad-as-some-believe-youtube-should-still-change-its-policies.shtmlkick musicians off of YouTube if they didn't agree to license their music to the subscription service it was building. At the time, we wrote about how this was overblown. As we noted, anyone could still post whatever videos they wanted to YouTube, it was just a question of whether or not you would be in YouTube's partner program, which would allow the artists to use ContentID to monetize other people's videos and a few other features as well. After I wrote that, musician Zoe Keating, who I consider a friend, emailed me the details of her own struggle with YouTube over this issue, and how the deal being offered actually was pretty crappy for her. Late last week, she posted a similar discussion on her blog, asking what she should do about YouTube, because she wants to use ContentID, but doesn't like some of the other terms in the deal.

Zoe's post has since gone somewhat viral, with many people insisting that YouTube's terms are absolutely crazy. Of course, when you look at the details, the terms are not really that crazy. However, YouTube should change them. Let's dig into the situation to explain why.

Zoe's main concerns were these terms:

1) All of my catalog must be included in both the free and premium music service. Even if I don’t deliver all my music, because I’m a music partner, anything that a 3rd party uploads with my info in the description will be automatically included in the music service too.

2) All songs will be set to “monetize,” meaning there will be ads on them.

3) I will be required to release new music on YouTube at the same time I release it anywhere else. So no more releasing to my core fans first on Bandcamp and then on iTunes.

4) All my catalog must be uploaded at high resolution, according to Google’s standard which is currently 320 kbps.

5) The contract lasts for 5 years.

As she noted, if she didn't sign the agreement, her YouTube channel would be blocked -- though, as we explained in our post last year, and as Zoe added in an update -- she could take her existing YouTube channel out of the partner program and keep it up. However, in doing so, she would give up the ability to monetize her music under the same terms.

Why these terms aren't entirely insane: From my reading of it, YouTube's concern is that consumers who pay for YouTube's fee-based music service will be reasonably angry if there is music they can find on the good old-fashioned free side of YouTube, but which is not accessible after they pay. From a consumer experience standpoint, that is kind of a crappy situation. You could definitely see some subscribers who get frustrated. In fact, I'd bet that there'd be some blog posts somewhere of someone bitching out YouTube's paid service for not having certain music that was available on the site for free... and that post would likely go viral as well, with people talking about how crappy YouTube's paid service was. Also, it wouldn't surprise me if some enterprising copyright holder somewhere would come up with some sort of legal theory involving suing YouTube over this, saying that it now knows which tracks are unlicensed, and thus has to proactively take them down. That is, it's entirely possible that without these requirements, YouTube goes back to facing a massive copyright liability problem.

Why YouTube should change its terms anyway: These are truly edge cases. Most musicians do seem fine with being in the various services, but if they (like Zoe) want to just to make use of ContentID, but not release all their music on YouTube, that should be allowed. As Zoe has told me in the past, the thing she likes about ContentID is the ability to pick and choose what videos to monetize. Use her music in a school project -- and she just let's it go and is happy to see. Use her music in a big commercial feature, and she'll click the button and get some money out of it. But the ContentID portion should be separate from the "release my music" portion.

On top of that, the requirement to release all music on the service, combined with the similar requirement that you have to release the music on YouTube the same time as on any other platform, is unnecessary. Yes, YouTube wants to make sure that its catalog competes with everyone else's. And, fragmenting the music world with "exclusives" is generally a crappy experience, but there should be some reasonable way to allow Zoe to do things like offer up songs to her biggest fans on Bandcamp first. YouTube should be able to create terms that accommodate that, and it's a shame that the company won't do so.

In the end, most of the terms are not really that unreasonable. It only creates an issue in special cases where someone wants to do something a little bit different. YouTube is left with the choice of which crappy edge case it's going to have to make a mess of: either the one where a musician wants to do something a little different, or the one where some consumers might get annoyed that certain music isn't available on its service. YouTube went with option (a), but there's really no reason that the company can't be a little more flexible in designing terms that account for cases like Zoe's.

The other issue is that, once again, YouTube has done an absolutely dreadful job explaining itself. This is not the first time this has happened. In fact, it seems to happen with alarming frequency that when YouTube makes these kinds of policy changes, it doesn't do a good job (or any job at all) of explaining them to the public in a way that makes sense. Frankly, the company could do a much better job being open and transparent about the policy choices it makes and the reasons why it does these things, but for whatever reason, it chooses not to do so.

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]]>things-can-be-fixedhttps://www.techdirt.com/comment_rss.php?sid=20150126/05182729815Wed, 17 Dec 2014 21:00:11 PSTFilm Academy Sues Family Of Oscar Winner For Selling Trophy On EbayTimothy Geignerhttps://www.techdirt.com/articles/20141217/05082329454/film-academy-sues-family-oscar-winner-selling-trophy-ebay.shtml
https://www.techdirt.com/articles/20141217/05082329454/film-academy-sues-family-oscar-winner-selling-trophy-ebay.shtml
The Motion Picture Academy is notorious for being quite litigious, particularly when it comes to anything to do with the Oscars. Hell, even websites essentially promoting the Oscars get sued by the Academy, because why the hell not? And don't you dare try to sell your tickets to the Oscars on the secondary market. But even with all of that, I wouldn't have expected to see the Academy assert that they own the award hardware they hand out to Oscar winners, including after the death of those winners. Confused? Check this out.

The Academy of Motion Picture Arts and Sciences has lined up a new lawsuit, painting the picture of a cinematographer's heir who ignored bylaws by selling a statuette on eBay. The statuette was awarded in 1953 to Robert Surtees for excellence in black-and-white cinematography for the film, The Bad and the Beautiful, which starred Kirk Douglas and Lana Turner. More than 60 years later, the Film Academy is in court after Carol Surtees allegedly auctioned the statuette for $40,500. The Academy makes its members agree that it has a "right of first refusal" if the statuettes are ever sold. To prevent a black market for the famous trophies, the Academy believes itself entitled to purchase the statuettes for $10 in the event they are ever sold.

Carol was the wife of Bruce Surtees, who in turn was the son of Oscar winner Robert Surtees. In other words, the Oscar statuette from 1953 had been passed down to Carol after her husband and father-in-law had both passed away. She's the widow of the winner's son. The point of me driving this home is that, even if we pretend that it makes sense for the Academy to be able to claim that an item worth thousands of dollars must first be offered to them for the price of 2/3 of a ticket to one of their movies, that agreement would have been with the award winner, not his or her heirs. In this case, the statuette had been passed on twice thanks to the grim reaper doing his thing. In what world does it makes sense for Carol Surtees to have to follow bylaws to which she never agreed?

Not that this lack of logic is keeping the Academy from suing for every last dollar she got for the statuette. You can read the full lawsuit [pdf and embedded below].

The Academy alleges that it sent a letter to Surtees on December 5, spoke on the phone with her on December 12, and despite reminders about the right of first refusal, the auction happened on or about that latter day. She's now being sued for breach of contract. The lawsuit also names John Does, who are being sued for alleged tortious interference. The Academy demands at least $40,500 in compensatory damages, punitive damages, and an order that the Oscar be put in a constructive trust, among other demanded relief.

I just can't seem to grasp how someone can be in breach of a contract to which they were not party. The Academy can assert they have these rights all they want, but I can't seem to find any reference to why those rights should exist with respect to Carol Surtees.

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]]>death-is-no-escape!https://www.techdirt.com/comment_rss.php?sid=20141217/05082329454Mon, 8 Dec 2014 10:31:07 PSTNegotiating Away Innovation: Dish Agrees To Kill Autohop To End TV BlackoutsMike Masnickhttps://www.techdirt.com/articles/20141207/06284129344/negotiating-away-innovation-dish-agrees-to-kill-autohop-to-end-tv-blackouts.shtml
https://www.techdirt.com/articles/20141207/06284129344/negotiating-away-innovation-dish-agrees-to-kill-autohop-to-end-tv-blackouts.shtmlsuing Dish for the past couple of years because of its "autohop" feature, which automatically records prime time shows, and then lets subscribers watch them (starting the very next day) with commercials automatically skipped. So far, Dish has won basically every ruling in the case, showing that such technology is perfectly legal.

But now it's probably dead.

As we predicted would happen back in March, CBS has used its fight over retransmission to get Dish to agree to basically kill off autohopper, delaying it for 7 days after the show initially airs. In exchange, CBS will drop its lawsuit over autohopper, but also agree to allow Dish to offer its programming online ("over the top" as they say). This is basically the same deal Dish struck with ABC/Disney back in March as well, meaning that it's the same thing that every network will eventually agree to as well.

The retransmission fight was always lurking in the background of the autohopper lawsuit. The networks claimed that since Dish had existing negotiated deals for retransmitting network shows, the autohopper stuff was a contract violation (in addition to a copyright violation). So, basically, the legal fights lasted until the retrans negotiations had to come up again. Getting agreements for internet streaming is certainly nice, but to have it come at the expense of a nice bit of innovation like autohop is ridiculous. Perhaps it opens the door for third parties to make such technologies themselves, but these days standalone DVR products are pretty much a relic of history.

Of course, how long will it be until someone sets up a commercial system for acting as a DVR for internet streams, complete with commercial skipping features? It's doable today, but you can bet that even though it's just like a regular DVR/VCR, the legacy TV guys will flip out and call in the next coming of Aereo.

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]]>shamefulhttps://www.techdirt.com/comment_rss.php?sid=20141207/06284129344Thu, 6 Nov 2014 09:39:42 PSTAT&T Still Proudly Makes Unlocking Phones Under Contract Annoying and ImpossibleKarl Bodehttps://www.techdirt.com/blog/wireless/articles/20141103/05473929025/att-still-proudly-makes-unlocking-phones-under-contract-annoying-impossible.shtml
https://www.techdirt.com/blog/wireless/articles/20141103/05473929025/att-still-proudly-makes-unlocking-phones-under-contract-annoying-impossible.shtmlAppleSIM, or universal SIM technology embedded in the iPad Air 2 that quickly allows users to switch carriers, presenting you with easy wireless broadband pricing for each carrier option. Of course, when Apple quietly announced this functionality, Verizon wasn't listed as a supporter. While AT&T was supposed to be a partner, the company later stated they wouldn't fully support the functionality either. In AT&T-fashion, they offered up a non-explanation explanation, stating that you can still switch carriers, but AT&T would just prefer it if you'd do it the old-fashioned, cumbersome way, because that's just the way they do it:

"With us you can change carriers with this iPad any time you want,” he said. “It is an unlocked device. … All [you] have to do is switch out the SIM in the device so it works on another carrier." As for why AT&T is locking the SIM card to its network while other carriers are not, Siegel said that “it’s just simply the way we’ve chosen to do it."

Of course, blocking anything that could possibly promote choice and competition is long how AT&T "does it," even if doing it that way doesn't always make coherent sense. We've documented a long and proud AT&T history of such behavior, ranging from blocking disruptive technology to trying to buy off the wireless sector's few serious competitors. You can be fairly sure Apple will have a hell of a time bringing AppleSIM technology to their phones, since that's simply not the way the old phone company guys -- pampered by a generation of regulatory capture (not to mention a massive retail and special access, or tower backhaul, duopoly) -- have chosen to do it.

AT&T can be a harsh partner if you're not familiar with the company's particular uncompetitive charms. Lee Hutchinson at Ars Technica has been a loyal AT&T customer ever since the launch of the original AT&T-exclusive iPhone, and simply wanted to unlock his device for use during an overseas trip -- yet ran into a brick wall at AT&T. After the carrier's auto-unlock website tool rejected his advances, he contacted live support, who informed him he'd need to pay a $195 early termination fee if he wanted to use his device the way he actually wanted to. That left Hutchinson justifiably annoyed and confused:

"Why all the fuss, AT&T? Why refuse to grant a simple, reasonable request from a customer who’s been with you for more than seven years, and who provides a steady $130 a month of revenue? All I wanted was to take my AT&T device with me overseas, rather than having to grab a loaner device from Ron Amadeo (who at this point basically has a Scrooge McDuck-style money vault, but filled with Android phones instead of gold coins). Now, I'm left with the option of accepting AT&T's policies—which I won't—or canceling my contract and taking my $130 a month of revenue to one of AT&T's competitors. All because they wouldn't agree to a simple request that would have had no affect on the terms of our existing agreement. In what world does that stupid calculus work out?"

After the DMCA kerfuffle of a few years ago, Congress passed a law making cell phone unlocking legal again last July, but it not only punted on the deeper problems inherent in the DMCA, but also on simply requiring that phones be completely unlocked at sale. Changes have come glacially, but not without a large amount of carrier whining. The FCC got the big four carriers to sign off on a set of voluntary guidelines (pdf) late last year requiring that they make phone unlocking policies clear, respond to user unlock requests within a couple of days, unlock all devices for overseas military personnel, and notify customers when their phone is eligible to be unlocked (carriers balked heavily at this last one).

Additional progress in killing off the long-term contract and ETF model here in the U.S. has come courtesy of T-Mobile, which, while not quite as disruptive on price as the press and CEO John Legere would have you believe, has done a great job in killing off a number of less consumer-friendly carrier policies. AT&T has responded to this competition the only way that pampered duopolists know how -- they first tried to destroy the competitor through buying it, and when that didn't work -- settled on clinging desperately to old anti-competitive policies like an old baby blanket, oblivious to the fact that you don't retain loyal customers by pissing them off.

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]]>ill-communicationhttps://www.techdirt.com/comment_rss.php?sid=20141103/05473929025Fri, 10 Oct 2014 11:33:40 PDT'Doctor' Promoting Roca Labs Actually A Pediatrician Who Lost His Medical License For Child PornMike Masnickhttps://www.techdirt.com/articles/20141010/07052228791/doctor-promoting-roca-labs-actually-pediatrician-who-lost-his-medical-license-child-porn.shtml
https://www.techdirt.com/articles/20141010/07052228791/doctor-promoting-roca-labs-actually-pediatrician-who-lost-his-medical-license-child-porn.shtmlRoca Labs, the company selling an "alternative" to gastric bypass surgery, which is actually a bunch of "industrial food thickening agents" that the company claims will fill up your stomach and not make you want to eat. Whether or not that actually works, the company has a bizarre gag order that it pushes on buyers which forbids them from ever saying anything negative about the company (and requiring them to allow Roca to share any positive results). That was already sketchy enough, but what caught our attention was that the company sued PissedConsumer claiming it was "tortious interference" to request complaints about the company, since so many of its buyers had agreed to this gag clause. We found that legal theory to be quite questionable, in our opinion. Things got even more bizarre after Roca decided to threaten with lawsuits the three former customers who agreed to provide evidence for PissedConsumer (even though it hadn't communicated with two of them for more than three years).

There was a hearing on Wednesday where the court rejected PissedConsumer's request to stop Roca from threatening to sue those customers, though the reasoning is unclear right now (I assume it will come out soon). The court is still considering Roca's request for an injunction against PissedConsumer.

Roca Labs’ website and YouTube channel are saturated with images of attractive men and women wearing lab coats emblazoned with the caduceus – a symbol commonly associated with doctors and medical professionals — leaving the viewer with the impression that these are educated, licensed professionals. This is a product I can trust!

Until yesterday, Roca Labs held out one such doctor — “Dr. Ross” — as its “Director of Medical Team”, hailing from “NJ, USA.” The company rarely identified him by his full name, instead severing his last name to a mere initial. In a “Letter to Your Doctor”, Dr. Ross described himself as “an independent medical consultant” describing the “Roca Labs Formula” to assure his “fellow doctor” as to its benefits. The letter was signed with his full name, followed by “MD” – medical doctor.

But, he notes, Dr. Ross (whose full name Steinbaugh has redacted) no longer has a medical license:

The New Jersey order also includes prohibitions which “not only bar[] a licensee from rendering professional services, but also from providing an opinion as to professional practice or its application” and requires “affirmative action to stop advertisements by which his/her eligibility to practice is represented.”

And yet, until earlier this week, "Dr. Ross" claimed to be the medical director at the company and claimed to "review each case for medical accuracy."

In addition to the advertisements above, there’s also this now-deleted post, under the “ask the doctor” in which Dr. Ross F. recounts his role in the company:

I have reviewed thousands of formal inquiries from the public that request to begin using the Roca Labs Formula for weight loss. [...] I review each case individually for medical accuracy. I have been the medical director at Roca Labs for the past year. I was in clinical medical practice for 10 years before moving into pharmaceutical management. I have been involved in the development and ongoing monitoring of the Roca Labs Formula. I work directly with the staff and customers to maintain the highest levels of medical accuracy and safety.

Of course, all of this disappeared right after Steinbaugh asked Roca about it. In response, Roca (in a long rambling email) said that the removal was not because of his request, but because Roca was "a serious company that acts according to its plans." Steinbaugh asked about those plans but didn't get an answer.

As Steinbaugh notes, it's entirely possible that what Dr. Ross was doing for Roca was legal, but it certainly looks sketchy.

To be sure, the orders of New Jersey and New York explicitly do not require Dr. Ross F. to “affirmatively advise patients or others of the revocation, suspension or surrender” except in response to an inquiry, nor is it entirely clear whether the order prohibits his association and work with Roca Labs. In fact, his precise relationship with the company is entirely unclear: was he merely there to give the appearance that someone whose name is preceded by “Dr.” endorses and gives legitimacy to the company’s “formula”? Or did he have a greater role in the company’s product? If so, did those acts — whatever they were – constitute the practice of medicine? And if there are other doctors — posts on the BBB site by Roca indicate that a doctor reviews qualification forms — what are their qualifications?

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]]>this-company-seems-so-trustworthyhttps://www.techdirt.com/comment_rss.php?sid=20141010/07052228791Thu, 3 Jul 2014 16:11:14 PDTJimmy Graham Loses $5 Million In Part For Listing Himself As A Tight End On TwitterTimothy Geignerhttps://www.techdirt.com/articles/20140702/11394827763/jimmy-graham-loses-5-million-part-listing-himself-as-tight-end-twitter.shtml
https://www.techdirt.com/articles/20140702/11394827763/jimmy-graham-loses-5-million-part-listing-himself-as-tight-end-twitter.shtml
We've had a great many discussions about how employers react to the social media content of their employees. There have been questions over whether employers should be able to fire staff for Facebook content, whether staff can be perma-banned from using social media sites at all, or even whether or not employees should be required to cough up social media passwords to their employers. These stories tend to focus on an employer doing something that makes the employee uncomfortable.

Unable to negotiate a deal, the Saints slapped Jimmy Graham with a franchise tag as a tight end. Graham disagreed, declaring himself a receiver, in order that he be paid like one. The dispute went to arbitration, and today arbitrator Stephen Burbank came down on the Saints' side. The difference is significant. A franchise tag pays a player the average of the five highest-paid players at that position, and WRs—especially the top tier—are paid better than their TE counterparts. A ruling favorable to Graham would have seen him make $12.312 million this season; instead, he'll make $7.035 million.

For you non-sports fans out there, the reason for the average price difference is due to the fact that a team's wide receivers are generally more skilled players compared with tight ends. Typically, receivers primarily, you know, receive, as in the ball, typically on pass plays. Tight ends traditionally occasionally catch passes, but are often used as on-the-line blockers as well and aren't considered to have the catching, jumping, and speed skills of a receiver. For you non-Jimmy Graham fans out there, Graham breaks the stereotype completely, having led his team in receptions, caught yards, and receiving touchdowns. His argument that he wasn't really a tight end had a ton of merit. Unfortunately for Jimmy Graham, the arbiter took to the opinion of Jimmy Graham in part when rendering his decision.

The arbitrator's decision isn't public, but dribs and drabs of Burbank's reasoning have come out. (Ian Rapaport and Albert Breer are your best sources.) Among Burbank's justifications:

-Graham attends TE position meetings. -Graham was drafted by the Saints as a TE.-Graham lists himself as a TE in his Twitter bio. (Yes, the Saints argued this.) Burbank, via Rapaport: "Mr. Graham refers to himself as a tight end in social media that he controls and his agents do so as well." -Graham lined up within four yards of the offensive line on a majority of his snaps last season.

Oops. Kind of hard to argue that you're not a tight end when your own Twitter bio calls you a tight end. Now, the article notes that the Twitter bio probably wasn't the key factor in the decision, stating that the arbiter likely instead focused on how close to the offensive linemen Graham started most plays (which is stupid, by the way), but it did serve as a sort of catchy "If it doesn't fit, you must acquit" moment against his claim.

Either way, before you go telling your bosses what role you play in a company, probably best that you get your story straight with your social media accounts first.

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]]>the-poorest-sainthttps://www.techdirt.com/comment_rss.php?sid=20140702/11394827763Thu, 26 Jun 2014 12:26:03 PDTGerman Government Drops Verizon Contract Over NSA Spying, But Still Won't InvestigateMike Masnickhttps://www.techdirt.com/articles/20140626/11222327688/german-government-drops-verizon-contract-over-nsa-spying-still-wont-investigate.shtml
https://www.techdirt.com/articles/20140626/11222327688/german-government-drops-verizon-contract-over-nsa-spying-still-wont-investigate.shtmlending its contract with Verizon over the quite plausible and reasonable fears that Verizon has been helping the NSA spy on the German government.

"There are indications that Verizon is legally required to provide certain things to the NSA, and that's one of the reasons the cooperation with Verizon won't continue," said [Interior Ministry spokesman Tobias] Plate.

Of course, this is the same German government that has basically blocked any real investigation from happening into the NSA's surveillance of the German people (perhaps because the Germans are complicit in those activities).

Still, this is yet another example of the NSA's activities hurting US business around the globe. But, rather than recognize it's a problem, the NSA and its defenders will keep blaming Ed Snowden.

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]]>actions-speak-louder-than-political-investigationshttps://www.techdirt.com/comment_rss.php?sid=20140626/11222327688Mon, 21 Apr 2014 03:40:58 PDTGeneral Mills Changes Policy After Internet Did Not 'Like' Its Plan To Remove Your Ability To Sue If You 'Liked' Its Facebook PageMike Masnickhttps://www.techdirt.com/articles/20140420/07293226971/general-mills-changes-policy-after-internet-did-not-like-its-plan-to-remove-your-ability-to-sue-if-you-liked-its-facebook-page.shtml
https://www.techdirt.com/articles/20140420/07293226971/general-mills-changes-policy-after-internet-did-not-like-its-plan-to-remove-your-ability-to-sue-if-you-liked-its-facebook-page.shtmlpreclude people from going to court if they so much as "liked" Cheerios on Twitter, the company has backtracked, changed its policy and admitted that consumers "didn't like" the new policy, though they insist it was all a misunderstanding:

As has been widely reported, General Mills recently posted a revised set of Legal Terms on our websites. Those terms – and our intentions – were widely misread, causing concern among consumers.

We rarely have disputes with consumers – and arbitration would have simply streamlined how complaints are handled. Many companies do the same, and we felt it would be helpful.

But consumers didn’t like it.

After throwing in some legalese (and admitting their lawyers made them do that), General Mills' director of external communications Kirstie Foster explained:

We’ll just add that we never imagined this reaction. Similar terms are common in all sorts of consumer contracts, and arbitration clauses don’t cause anyone to waive a valid legal claim. They only specify a cost-effective means of resolving such matters. At no time was anyone ever precluded from suing us by purchasing one of our products at a store or liking one of our Facebook pages. That was either a mischaracterization – or just very misunderstood.

Not that any of that matters now.

On behalf of our company and our brands, we would also like to apologize. We’re sorry we even started down this path. And we do hope you’ll accept our apology. We also hope that you’ll continue to download product coupons, talk to us on social media, or look for recipes on our websites.

That first paragraph is not entirely accurate. While similar claims do exist in all sorts of consumer contracts (and, contrary to the statement, they often do cause people to effectively waive valid legal claims), they tend to exist in actual contracts. That is, not in a website privacy policy or terms of use -- which is what made General Mills' effort so notable.

Again, there is a simple solution to all of this. It should be clear that simply throwing up a "terms of use" page has no direct legal impact, especially if there's no evidence that anyone has actually read it.

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]]>just trying to helphttps://www.techdirt.com/comment_rss.php?sid=20140420/07293226971Tue, 14 Jan 2014 13:39:37 PSTWeather Channel To DirecTV: Meet Our Cost Demands Or EVERYONE WILL DIE!Timothy Geignerhttps://www.techdirt.com/articles/20140114/08524125869/weather-channel-to-directv-meet-our-cost-demands-everyone-will-die.shtml
https://www.techdirt.com/articles/20140114/08524125869/weather-channel-to-directv-meet-our-cost-demands-everyone-will-die.shtml
In previous stories where a television channel goes to war with DirecTV and its peers, the mantra by the channel requesting a higher contract is typically the same: our entertainment provides value beyond what we're paid. That was the case when Viacom held its fans hostage in one such dispute, for instance, or when the far-more-sane AMC had a similar dispute. The point is that it always seems to come down to nothing more than money, where the dispute is over how much monetary value a channel has to a broadcaster. Nothing more, nothing less.

Not so, when it comes to the Weather Channel's dispute with DirecTV. Sure, they similarly want more money, but their response campaign to DirecTV bristling at the request while offering a different, televised weather channel is, shall we say, slightly more melodramatic and massively more aggressive.

Usually when cable channels and distributors go to war over money, the two sides warn customers that a blackout will be inconvenient. This time, the Weather Channel is saying it'll be downright dangerous. The channel has tried to rally the public's support by reminding people that it is an emergency lifeline during severe weather.

"The Weather Channel isn't just another TV network. It's a must-have resource that keeps families safe," proclaimed a headline on Weather.com.

Hmm, so the idea is that if DirecTV doesn't meet the Weather Channel's price demands, the weather monster is going to kill everyone? That'd be one hell of a provocative argument to make if it wasn't made, you know, at the damned website from which everyone can also get that life-saving information. The argument not only pretends that DirecTV isn't offering a different weather channel that would serve a similar function, or that there are various web-based methods for getting weather reports and alerts via computer and/or smartphone and mobile device, but it also ignores the Weather Channel's own services.

This irony doesn't appear to be lost on DirecTV.

DirecTV executives say that, contrary to the Weather Channel's positioning, there are many other sources for urgent weather news these days, including WeatherNation.

"When information is readily available everywhere, it's no longer necessary for people to have to pay a premium," York said in a telephone interview. He also asserted that the Weather Channel devotes up to 40 percent of its programming schedule to "reality TV shows."

I don't know what the actual outcome of this dispute will be, but it would appear the emotional argument that everyone is going to die without the Weather Channel on DirecTV is one that should and will fall flat on its face. Good try, though, guys.

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]]>storming-out-of-your-contracthttps://www.techdirt.com/comment_rss.php?sid=20140114/08524125869Fri, 22 Nov 2013 09:37:00 PSTDigital Music News Explains To Apple What Fair Use Is, Reposts Contract That Apple Tried To DMCA AwayMike Masnickhttps://www.techdirt.com/articles/20131121/18025625329/digital-music-news-explains-to-apple-what-fair-use-is-reposts-contract-that-apple-tried-to-dmca-away.shtml
https://www.techdirt.com/articles/20131121/18025625329/digital-music-news-explains-to-apple-what-fair-use-is-reposts-contract-that-apple-tried-to-dmca-away.shtmlmake a questionable copyright claim on a copy of its iTunes Radio contract, that had been posted to Scribd by the site Digital Music News, for the purpose of analyzing and discussing the contract. As we pointed out at the time, it was difficult to see how this was a legitimate DMCA takedown. The publication was in the public interest and was used for discussion, commentary and critique. The copyright on the contract, whatever might exist, would be very thin. And, of course, there's no "market" for the contract itself, so posting it wouldn't undermine the market at all.

Paul Levy of Public Citizen, representing Digital Music News (disclaimer: Levy has represented us on a few occasions in the past, and I introduced Levy to DMN over a different matter a while back), has now sent Apple a letter, explaining the basics of fair use and why Apple is wrong to issue a bogus takedown.

Apple should know better. Although Apple may not have been pleased by DMN's coverage, the solution was not to suppress the information that DMN had provided. Certainly, the contract includes sufficient original expression to be copyrighted, but the posting was plainly fair use. The contract was posted for reasons of newsworthiness, a transformative and essentially non-commercial use. The posting of the contract in now way interfered with the market for the document, which is not sold, after all. Indeed, the purpose of the takedown was not to protect legitimate copyright interests, but to suppress criticism, which could well be deemed copyright misuse. In issuing the DMCA takedown, Apple was required to consider the fair use reasons for the posting, and the filing of the notice implicitly represented that the posting was not fair use. Consequently, we believe that the takedown was wrongful.

Of course, rather than directly challenging the takedown, DMN has decided to take a different path. Rather than posting the contract to Scribd, it has placed it directly on its own server and written a new article about it (comparing it to Pandora's contract terms -- and, actually, Apple comes out rather favorably in comparison). Levy suggests to Apple's lawyers that they might want to think carefully before trying to issue another DMCA notice about that contract.

We are, however, focused on the future. Today, DMN has published a new story entitled Who's Screwing You Worse: iTunes Radio, or Pandora... and it has included links to the contract which is now hosted on its own server.... In the event Apple serves a DMCA notice on DMN, or on its upstream provider, or if Apple takes any other action against the availability of the contract, we will assume that Apple has decided to litigate the fair use issue. We will be ready to accommodate such a choice.

Your move, Apple.

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]]>do-you-want-to-litigate?https://www.techdirt.com/comment_rss.php?sid=20131121/18025625329Fri, 8 Nov 2013 13:24:00 PSTBilly Bragg Says Don't Blame Spotify; Blame The Record LabelsMike Masnickhttps://www.techdirt.com/articles/20131107/16343725173/billy-bragg-says-dont-blame-spotify-blame-record-labels.shtml
https://www.techdirt.com/articles/20131107/16343725173/billy-bragg-says-dont-blame-spotify-blame-record-labels.shtmlhatred towards successful internet music services lately, with the main targets being the most successful: Spotify and Pandora. Could those services be doing better? Yes, absolutely, but so much of the the hatred seems incredibly misplaced. Here are services that are actually paying artists, and that have built platforms that millions upon millions of people love. Many of the complaints about the "low payout" numbers involve people totally misunderstanding the data as well. But there's also been one elephant in the room which hasn't received as much attention: Spotify and Pandora pay the record labels, since they hold the copyright. Often, a big part of the problem is that the labels then do everything to avoid paying the artists.

In the past, I've disagreed with singer Billy Bragg's view of internet services, but this time around, he's right: in many cases, the real problem (yet again) are the labels and not these services. He's written a detailed Facebook post explaining this position, noting that complaining about Spotify is like "campaigning against the Sony Walkman" when it was first introduced. Going against what music fans want is never a good strategy.

From there, he gets to the real issue: how the labels account for streaming revenue:

The problem with the business model for streaming is that most artists still have contracts from the analog age, when record companies did all the heavy lifting of physical production and distribution, so only paid artists 8%-15% royalties on average.

Those rates, carried over to the digital age, explain why artists are getting such paltry sums from Spotify. If the rates were really so bad, the rights holders - the major record companies - would be complaining. The fact that they're continuing to sign up means they must be making good money.

Here in Sweden - where I'm doing a show tonight in Malmo - artists have identified that the problem lies with the major record labels rather the streaming service and are taking action to get royalty rates that better reflect the costs involved in digital production and distribution. UK artists would be smart to follow suit.

Of course, there have already been lawsuits about similar issues, related to legacy contracts. You hopefully remember Eminem's big lawsuit over whether or not digital sales count as licenses or sales, since "licenses" involve a 50% cut, while "sales" are more like 10 to 15%. As the Guardian article notes, there are some labels that do in fact pay a greater percentage on streaming deals, as they should, but many legacy artists are locked into bad contracts. And, of course, there's always the issue of how well the labels actually handle their accounting, and the way they play games to make sure artists never "recoup," making it difficult to get any royalties.

The internet services definitely can do more to help artists, but much of the blame often seems misplaced, so it's great to see someone like Bragg recognizing that.

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]]>there we gohttps://www.techdirt.com/comment_rss.php?sid=20131107/16343725173Mon, 24 Jun 2013 14:53:33 PDTUp Is Down, Day Is Night, And Keeping Mobile Phones Locked Increases Consumer Choice?Mike Masnickhttps://www.techdirt.com/blog/wireless/articles/20130622/23444023586/up-is-down-day-is-night-keeping-mobile-phones-locked-increases-consumer-choice.shtml
https://www.techdirt.com/blog/wireless/articles/20130622/23444023586/up-is-down-day-is-night-keeping-mobile-phones-locked-increases-consumer-choice.shtmlargue that we don't need to allow mobile phone unlocking, as is currently being debated in Congress, after over 100,000 people signed a petition in favor of it and the White House came out supporting such unlocking rights as well. I'm not sure where Moroney got his information, but it's almost entirely factually incorrect, which is quite incredible. Derek Khanna has a very thorough point-by-point debunking, but here's a shorter look at some of Moroney's statements that really don't make any sense. After reviewing that background, along with one of the bills that has been introduced, Moroney jumps into the meat of his argument:

Despite the best of intentions, the very innovation that some members of Congress, the White House and presumably consumers who signed the petition claim they want to protect would actually be hampered by allowing consumers and third parties to unlock their cellphones. The DMCA is supposed to prevent digital piracy by making it illegal to disable digital rights management software, and it applies to the device locks that carriers put on cellphones — primarily to prevent phones they sell from being used on other carrier networks.

First off, it's not intentional that the DMCA applies to the locks on mobile phones. Basically, the phone providers recognized the law provided them with a backdoor way of locking in customers, and used it. The intention of the DMCA was to stop copyright infringement, not phone locking. That it was eventually used that way is because the authors of section 1201, the anti-circumvention provision of the DMCA, drafted it terribly, opening up lots of opportunities for tech companies -- including ink cartridge makers, garage door openers, and mobile phone makers -- to abuse the law not to stop copyright infringement, but to be anti-competitive.

When tech companies spend billions of dollars on research and development, they have to recoup those costs and make a profit to stay on the cutting edge of innovation.

One of these things has nothing to do with the other. Just because a phone maker needs to recoup its money on R&D has nothing to do with whether or not it should have the right to forbid unlocking by using a twisted interpretation of copyright law. There are lots of ways to recoup your investment, such as by selling a product at a reasonable price above what you made it for.

One of the ways they do this is by entering exclusive agreements with certain wireless carriers. AT&T, for example, dominated the smartphone market for years because of its exclusive contract to distribute Apple’s iPhone in the United States. AT&T paid Apple an exceptionally high subsidy on top of the consumer purchase prices, but the company made quite a return on its investment. In subsidizing more expensive phones, AT&T could sell more expensive data plans to its customers.

Phone subsidies are really a red herring here. Even with phone unlocking, mobile carriers can (and do!) offer phone subsidies. In the meantime, carriers like T-Mobile have already realized phone subsidies are bad, and actually mean consumers pay more in the long run. But, again, this has nothing to do with unlocking. Most subsidies are held in place via contractual agreements and early termination fees that have nothing to do with phone unlocking.

Now that cellphone manufactures and cellphone carriers have more protection for their intellectual property, they can recoup their research-and-development investment more quickly and, hence, spend more on developing new technologies in the future. It also ensures that most major carriers will continue to offer subsidized phones to their customers — increasing consumer choice.

Except, this isn't true. None of this is about "protecting intellectual property." It's about trying to keep people from switching carriers when their contracts are up. And for all his talk about "increasing consumer choice," that's simply incorrect. Being able to unlock your phone, and go to a different provider once there's no contract, clearly increases consumer choice. If someone doesn't want to buy a new phone, but wants to switch carriers, unlocking means they don't have to spend on a costly new phone, but can continue to use their existing phone.

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]]>let's-try-this-againhttps://www.techdirt.com/comment_rss.php?sid=20130622/23444023586Tue, 21 May 2013 10:05:49 PDTKitchen Nightmares Lawyers Threaten Infamous Samy And Amy If They Talk About Their Experience On The ShowMike Masnickhttps://www.techdirt.com/articles/20130521/01321523153/kitchen-nightmares-lawyers-threaten-infamous-samy-amy-if-they-talk-about-their-experience-show.shtml
https://www.techdirt.com/articles/20130521/01321523153/kitchen-nightmares-lawyers-threaten-infamous-samy-amy-if-they-talk-about-their-experience-show.shtmlcrazy mess that followed the recent episode of the show Kitchen Nightmares on Fox, in which the star of the show, Gordon Ramsay, actually walked away from Amy's Baking Company, after the owners, Samy and Amy Bouzaglo, didn't take well to any criticism. After the episode aired, they were further mocked on Yelp and Reddit (Yelp "haters" were a key part of the episode), and there was an explosion of anger on the restaurant's Facebook page, though the couple insists they were hacked.

Following all of this, however, the restaurant announced that it was doing a grand "re-opening" today, which involved a planned press conference and a "job fair" to try to hire 30 new workers. As the show noted, the Bouzaglos apparently have difficulty keeping staff employed for very long. However, the "press conference" has been cancelled. The couple claims it had to do with death threats they received, though it might have more to do with a very different kind of threat: a legal threat from the producers of the show, as reported by RadarOnline.

Lawyers representing the producers of Kitchen Nightmares, Upper Ground Enterprises, sent the couple a letter warning them that talking about the show would be a breach of contract:

We understand that you are planning a public event on May 21, 2013, at which you will discuss your experiences and your "unflattering portrayals" on the show. If you speak about the show without Upper Ground's and Fox's prior approval, and if you disparage the show, its host, or its producers, you will breach your obligations under Paragraph 10 of your Personal Release and Paragraph 14 of your Participant Agreement. These agreements prohibit you from speaking publicly about Kitchen Nighmares, other than to acknowledge "the mere fact of your participation in the Series in personal publicity relating to yourself." Your conduct exposes each of you to liability for liquidated damages of $100,000.

Hmm. While this is a reminder to be careful about what sorts of gag clauses you sign before you do anything, it still seems like a highly questionable move by the producers. The more they seek to silence the couple, the more it suggests that perhaps the portrayal wasn't entirely fair. Meanwhile, the more the couple is allowed to stay in the news, the better one would think it would be for the TV show. The couple's actions and statements on the episode were absolutely ridiculous and clearly showed a restaurant/ownership not worth patronizing. Since then, the couple's confirmed statements (even ignoring the Facebook comments, whether or not you believe they were the result of hackers) concerning Yelp have only served to confirm that the couple can't take any criticism and seem to think that bad reviews of bad food are the world out to get them.

The decision to call out the gag order in the contract to silence them seems ridiculous by Fox. Even if the couple trashed the show (as expected), does anyone think that the couple has even the slightest credibility at this point? No one believes them. Pulling out the gag order makes the show look like it has something to hide.

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]]>hmmmhttps://www.techdirt.com/comment_rss.php?sid=20130521/01321523153Fri, 5 Apr 2013 11:52:00 PDTYouTube Won't Put Your Video Back Up, Even If It's Fair Use, If It Contains Content From Universal MusicMike Masnickhttps://www.techdirt.com/articles/20130405/01191322589/youtube-wont-put-your-video-back-up-even-if-its-fair-use-if-it-contains-content-universal-music.shtml
https://www.techdirt.com/articles/20130405/01191322589/youtube-wont-put-your-video-back-up-even-if-its-fair-use-if-it-contains-content-universal-music.shtmlit won't repost those videos, even if the video uploaders file a counternotice and show that they're relying on fair use. YouTube claims that it will still keep some of those videos blocked due to "contractual" obligations:

YouTube enters into agreements with certain music copyright owners to allow use of their sound recordings and musical compositions.

In exchange for this, some of these music copyright owners require us to handle videos containing their sound recordings and/or musical works in ways that differ from the usual processes on YouTube. Under these contracts, we may be required to remove specific videos from the site, block specific videos in certain territories, or prevent specific videos from being reinstated after a counter notification. In some instances, this may mean the Content ID appeals and/or counter notification processes will not be available. Your account will not be penalized at this time.

If this sounds vaguely familiar to something in the past, you may recall that a few years ago, Universal Music and Megaupload got into a bit of a spat when UMG issued a questionable takedown of a song promoting Megaupload, which featured a ton of big stars singing the praises (literally) of Megaupload. Megaupload eventually sued UMG, but ended up dropping that lawsuit as a month or so later it had bigger legal issues on its hands, following the US's decision to shut down Megaupload. But, at the time, Universal Music made a strange claim that it had some sort of contractual agreement that allowed it take down videos like Megaupload's. YouTube quickly came out with a statement denying this, but the situations described in McKay's post certainly raise serious questions about this, and clearly suggest that YouTube has made at least some deals that effectively wipe out fair use for some users. I assume it will surprise next to no one that the key example that led McKay to discover this situation... also involved Universal Music.

As I noted at the time of that UMG/Megaupload spat that I believed the real issue might be YouTube's contract with Universal Music for Vevo -- and I suspect that's still the case now. As I said then, part of the "announced" deal was that as part of providing the backend for Vevo, YouTube would transfer over the videos of various UMG artists, such that they appeared exclusively on Vevo. I suspect that's the same thing happening here. Because part of the Vevo deal is a promise that Vevo gets exclusive rights to videos involving certain artists' works, it allows YouTube to simply ignore fair use claims from users on such content, and refuse to ever post them again.

Now, as McKay notes, this is (mostly) well within YouTube's rights. I remember, a few years back, seeing a discussion on some legal blogs about this question. The DMCA implies that if you file a legitimate counternotice following a DMCA takedown and if the copyright holder does not take further legal action, the service provider is obligated to put the work back up in no less than 10, but no more than 14 business days. But, to some extent, that seems questionable. After all, as a service provider, any site has the right to not allow certain content to be published if it doesn't want to. And yet, if read literally, some could make the argument that the DMCA obligates a service provider to put up content even if it doesn't want to. As McKay notes, in this manner, the only liability is to the person who filed the counternotice, and any such liability would likely be pretty limited.

Either way, there's no way to look at this that makes YouTube look good. Following so soon on our other story about YouTube taking down a video on a questionable "terms of service" violation and then refusing to repost the video, it's once again a situation where it seems like YouTube needs to do a much better job handling these situations. While we obviously don't know the details of the UMG contract, fair use rights cannot be signed away, especially by two third parties. It would be a shame if YouTube decided that it would arbitrarily give UMG the ability to deny someone's fair use rights in posting a video.